Myanmar is battling a plunging local currency amid an unprecedented dollar shortage, driving up the cost of imports and worsening the economy’s struggle with the dual challenges of the pandemic and post-coup financial isolation.
The kyat has tumbled about 50% since the military seized power in February, triggering a freeze on parts of Myanmar’s foreign reserves held in the U.S. and the suspension of multilateral aid — both key sources of foreign currency supplies. Restrictions on cash withdrawals have fueled worries about the safety of money in banks, prompting people to seek more widely used currencies such as the U.S or Singaporean dollars or Thai baht, analysts said.
The Central Bank of Myanmar’s efforts to quell the rush for dollars, including stepping up foreign currency supplies and ordering exporters to repatriate earnings within 30 days, have failed to stem the kyat’s slide. The currency may plunge further to 2,400 to a U.S dollar by the end of this year and 3,200 by the end of 2022, according to Jason Yek, senior Asia country risk analyst at Fitch Solutions.